Philippines and Korea have concluded negotiations paving the way for bilateral free trade agreement (FTA) that would further liberalize trade in goods between the two countries, including gradual elimination of tariffs on Philippine bananas and canned pineapple exports and exports of Korean automobiles and autoparts.
Philippines Trade Secretary Ramon Lopez and Korean Trade Minister Han-Koo Yeo signed a joint statement on Tuesday, Oct. 26, 2021, announcing the conclusion of trade negotiations prior to the ASEAN-Korea Summit. The bilateral FTA, the third for the Philippines, was concluded two years after its launch in June 2019.
The concluded Korea-Philippines FTA negotiations cover Trade in Goods, Trade Remedies, Rules of Origin, Customs Procedures and Trade Facilitation, Economic and Technical Cooperation, Competition, and Legal and Institutional Issues.
Both parties also agreed to further negotiate provisions for the Chapters on Trade in Services and Investment no later than one year after entry into force of the Korea-Philippines FTA. Philippines and Korea also committed to complete all necessary domestic procedures towards the signing of the Korea-Philippines Free Trade Agreement in early 2022.
In the statement, both parties acknowledged that the FTA will help contribute to the economic recovery efforts of the Philippines and Korea.
“Good deal for our agri farmers,” said Lopez, who revealed that Philippine bananas can enter Korea at zero duty in 5 years and canned pineapples in 7 years.
He was evasive though on what the Philippines has given up in exchange for the tariff treatment on the country’s fruit exports. During the negotiations, South Korea was batting for zero duty on its automobiles and autoparts exports to the Philippines. The Philippines was also pushing for Korea to commit to invest in motor vehicle production in the country.
The country’s trade chief did not provide more details, except to say that the final negotiations focused on market access for Philippine banana exports and for Korean automotive units and parts. “The Philippines was also able to secure tariff elimination for bananas, which was previously excluded under the ASEAN-Korea FTA Likewise, the discussions allowed for an improved tariff treatment for processed pineapples, as compared to the Regional Comprehensive Economic Partnership (RCEP) concessions,” he said.
He further noted that with the RCEP agreement complemented by the bilateral FTA with Korea, the trade value of Philippine exports to Korea will now be substantially covered. Hence, it will make the Philippine exports competitive in the said market.
Once enforced, the FTA with South Korea will be an important vehicle for enhancing trade flows, and generating more investment and employment opportunities in the process.
“We are glad that our trade negotiations with South Korea have come to a fruition. We also thank Minister Yeo and the Ministry of Trade, Industry and Energy (MOTIE) for their continued collaboration in facilitating a wider economic cooperation with our Philippine trade department,” Lopez said.
Both trade partners have acknowledged that the FTA can contribute to the swift recovery for the robust and resilient growth of the economies of the two countries.
At the conclusion of the trade talks, both parties called the deal mutually beneficial and paving the way for high level of liberalization on trade in goods.
Once the Philippines-Korea FTA is implemented, Lopez said it will stimulate trade and hopefully allow for more investments from Korea providing avenues for Korean companies and industries to diversify and expand their economic interests in other ASEAN countries, which is in line with the promotion of Korea’s New Southern Policy.
The document will undergo legal scrubbing and signing of the FTA deal before February 2022, he said.
Negotiations for the bilateral FTA in June 2019 in Seoul, South Korea where both countries agreed to achieve a comprehensive and future-oriented FTA.
In November 2019, the Philippines and Korea signed the Early Achievement Package that confirmed the agreement of both sides to lock in the list of already offered at the time. Taking off from the said achievement package, the two countries finally resolved outstanding issues that led to the conclusion of the negotiations.